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Most Governors Refuse to Set Up Health Exchanges

WASHINGTON — The Obama administration said Friday that more than half the states had rejected its pleas to set up their own health insurance exchanges, dealing a setback to President Obama’s hopes that Republicans would join a White House campaign to provide health insurance to all Americans.

Friday was the deadline for states to notify the federal government of their plans, and administration officials had been hoping that Mr. Obama’s re-election would overcome resistance to the new health care law.

Federal officials said they knew of 17 states that intended to run their own exchanges, as Congress intended.

Two of those states, New York and Kentucky, won conditional federal approval on Friday for their plans to create and run state-based exchanges. Kathleen Sebelius, the secretary of health and human services, also approved an application from the District of Columbia.

In seeking federal money, New York estimated that one million people could obtain insurance through its exchange. In addition, said Josh Vlasto, a spokesman for Gov. Andrew M. Cuomo, the exchange will lower the cost of coverage for many New York businesses.

But in Virginia, after more than a year of planning and research, Gov. Bob McDonnell said his state would not operate its own exchange. “Despite repeated requests for information, we have not had any clear direction or answers from Washington until recent days,” Mr. McDonnell said.

On Monday, Ms. Sebelius gave preliminary approval to state-based exchanges being established by Colorado, Connecticut, Maryland, Massachusetts, Oregon and Washington.

The exchanges are online supermarkets where people can shop for private health insurance and obtain federal subsidies to help defray the cost. The Congressional Budget Office has estimated that 25 million people will eventually receive coverage through the exchanges.

Federal officials and federal contractors will set up and run the exchange in any state that is unable or unwilling to do so.

Gary M. Cohen, a federal health official, said the administration “has encouraged states to establish their own exchanges.” But, he added, consumers will have access to affordable health insurance in all states, regardless of who is in charge of the exchange.

The concept of an exchange is simple: Competition will drive down prices. But operating an exchange is an immense technical challenge requiring sophisticated information technology to digest and display huge amounts of data on the costs and benefits of various insurance plans.

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The federal government and states face a series of deadlines in the new year. On Jan. 1, Secretary Sebelius must determine whether each state will be able to operate its own exchange in compliance with federal standards. By Feb. 15, states must notify the federal government if they want to help with selected tasks, like consumer assistance and the supervision of health plans, in partnership with the federal government.

On Oct. 1, consumers can begin to enroll in health plans, for coverage starting on Jan. 1, 2014, when most Americans will be required to have insurance.

Administration officials said they were delighted this week when a Republican governor, C. L. Otter of Idaho, announced plans to establish a state-run exchange.

However, Mr. Otter’s rationale provided little comfort to the administration. He said he did not want to surrender power to “federal bureaucrats.” He denounced “the mandates and overreaching federal authority of the Affordable Care Act.” He said the law “will do little or nothing to reduce costs while force-feeding us coverage and increasing the size and scope of government.” And he said his decision could be rescinded if the State Legislature disagreed with him.

Pennsylvania seriously considered running its own exchange, but Gov. Tom Corbett said on Wednesday that he would not pursue the idea.

“State authority to run a health insurance exchange is illusory,” Mr. Corbett said. “In reality, Pennsylvania would end up shouldering all of the costs by 2015, but have no authority to govern the program.”

In Tennessee, state officials did a huge amount of planning for a state-run exchange. But Gov. Bill Haslam announced this week that he had decided against the idea because the Obama administration had failed to answer numerous operational questions.

Gov. Chris Christie of New Jersey cited similar concerns in vetoing legislation to establish a state-based exchange last week.

“New guidance continues to trickle out of Washington at an erratic pace,” Mr. Christie said.

A version of this article appears in print on December 15, 2012, on Page A13 of the New York edition with the headline: Majority of Governors Refuse To Set Up Health Exchanges. Order Reprints|Today's Paper|Subscribe